Most cannabis stocks have seen their shares slide so far this year, but Jazz Pharmaceuticals (JAZZ 0.77%), WM Technology (MAPS 0.93%), and Glass House Brands (GLAS.F -0.14%), have all seen double-digit rises in their shares.
All three companies are different in their connection to cannabis. Jazz uses cannabis compounds in some of its therapies. WM Technology is known best for its Weedmaps website, and mobile app that brings cannabis retailers and customers together, while Glass House Brands is looking to become the largest vertically integrated cannabis seller in California, the biggest cannabis market in the United States.
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Jazz Pharmaceuticals has a connection to the plant
Jazz Pharmaceuticals specializes in oncology and neuroscience therapies. So far this year, its stock is up 24%. Thanks to its purchase of GW Pharmaceuticals last May, the company also has revenue from therapies that use cannabis compounds.
Jazz posted 2021 revenue of $3.1 billion, up 31% over 2020. Because of its expenses connected with its purchase of GW Pharmaceuticals, earnings per share (EPS) came in at negative $5.52, compared to positive EPS of $4.42 in 2020, with an adjusted EPS of $16.23, compared to adjusted EPS of $12.46 in 2020. Adjusted EPS, after backing out acquisition-related costs and other one-time expenses, gives a more realistic picture of the business's performance.
It has a large portfolio of drugs that have nothing to do with cannabis, but it also had $658.3 million in sales for Epidiolex (cannabidiol), counting its sales from GW Pharmaceuticals, representing a growth of 29% year over year. Epidiolex is used to treat seizures associated with Lennox-Gastaut syndrome, Dravet syndrome, or tuberous sclerosis complex. In the fourth quarter, the drug had sales of $193.8 million, a jump of 35% over the same period in 2020.
The company also sells Sativex (nabiximols), a cannabis compound in a mouth spray used to treat spasticity in multiple sclerosis (MS) patients. It is available in 24 countries, but is not yet approved in the United States. In 2021, it had sales of $12.7 million in Sativex. The company has the drug in phase 3 trials in the United States to treat MS spasticity, and says that a positive result could allow it to do a New Drug Application (NDA) submission for the drug to the U.S. Food and Drug Administration (FDA) this year.
As for this year, the company said it anticipates revenue of $3.46 billion to $3.66 billion, representing growth between 11.8% to 18.2%.
WM Technology is helping the industry find its way
WM Technology provides technology and software to the cannabis industry, with cloud-based software as a service (SaaS) solutions that help cannabis companies' compliance with various regulations. The company is best known for its Weedmaps website and mobile apps that help consumers to find cannabis retailers, brands, and products. The company just went public through a special purpose acquisition company (SPAC) last year. Since the start of this year, its stock is up 11%.
Last year, the company reported record annual revenue of $193.1 million, up 19% over 2020, with annual net income of $152.2 million, up from $38.8 million in 2020. The company has 18,000 businesses listed on its Weedmaps site and increased its monthly paying client base by 5% to 4,337, including 55% of U.S. retail cannabis licenses. As of March, it said it has 15 million monthly active users on its platforms. The one down sign is that the company spent big to ramp up its business, so its earnings before interest, taxes, depreciation, and amortization (EBITDA) fell to $31.7 million in 2021 from $42.8 million in 2020.
The company has significant growth potential as it helps cannabis companies advertise their services in a way that allows them to avoid some states' cannabis advertising restrictions. The company's guidance for 2022 anticipated full-year revenue between $255 million and $265 million, a jump of between 32% to 37%, but with another dip in EBITDA to between $15 million to $20 million due to company initiatives for growth.
Glass House Brands sees a golden opportunity in California
Glass House Brands is a vertically integrated cannabis company that operates exclusively in California, with 6 million square feet of cultivation facilities and four retail outlets, plus three more planned in the state in Eureka, Isla Vista, and Santa Ynez by the fourth quarter. So far this year, the company's stock is up more than 31%. It went public last March via a $567 million SPAC.
The company reported a 2021 revenue of $69.4 million, up 44% year over year. Glass House explained that the growth was led by increases in the company's wholesale consumer packaged goods (CPG) business, which rose 93% thanks to strong branded sales. Retail sales were up by 50%, mostly because of the full-year effect of the company's Berkeley store. Since opening in January of 2021, it produced $6.8 million in revenue, the company said.
The company isn't profitable yet. In 2021, it had an EPS loss of $1.13 compared to an EPS loss of $0.78 in 2020. However, it is focusing on growth and said the addition of its 5.5 million-square-foot growing facility in Ventura County, assuming the pricing of wholesale and CPG remains steady, should allow Glass House to generate positive cash flow from operations by early next year. The company bought the facility in September for $93 million, and just got approval last month for a marijuana growing license for the facility, which had previously been used to grow tomatoes and cucumbers.
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The choice depends on what you're looking for
Jazz Pharmaceuticals appears to be the safest of the three cannabis stocks because it has so much diversification, with a portfolio that extends well beyond its cannabis-compound therapies. It also had the second-most growth of the three companies.
Glass House Brands had the most growth last year and has the most potential as it is still in its infancy, but because it is the only pure-play cannabis stock, there's a bit more risk there, particularly as it is not yet profitable. WM Technology operates in a first-mover niche in a growing industry, and it had the second-most growth of the three stocks. It presents less risk than Glass House and not much more than Jazz Pharmaceuticals.
